Kentucky regulator 'very confident' in its approach to sports betting

7 weeks to launch, 2 of 14 enforcement staff hired
Posted at 10:03 AM, Jul 20, 2023

CINCINNATI — The Kentucky Horse Racing Commission brushed off a lawmaker’s questions about staffing this week as it races to launch the commonwealth’s new sports betting industry by Sept. 7.

In June, the gambling regulator said it would add “14 new positions in sports wagering.” But in testimony to the Interim Joint Committee on Appropriations & Revenue Wednesday, KHRC Executive Director Jamie Eads said not all of those employees will work exclusively on sports betting and only two have been hired so far.

“One of those started July 1. Another started July 16,” Eads said. “We have eight more coming in August 1, six more coming in the middle of August and two more we’ve had to repost.”

Critics have questioned whether KHRC is ready to regulate sports betting after a WCPO 9 I-Team analysis showed Kentucky has 30 times fewer gambling enforcement staff than Ohio and 38 times fewer than Indiana. Sen. Chris McDaniel (R-Ryland Heights) told the I-Team in May that lawmakers would hold public hearings about KHRC’s plans for regulating the industry.

He was the only legislator who asked questions Wednesday during a 15-minute presentation by KHRC.

“Are you making a supplemental request for money and is 14 enough positions for you?” McDaniel said. “The integrity of it all is critical, right? I want to make sure you’ve got the money and we know where the money’s coming from to get you off the ground properly and make sure you’re confident there.”

“Thank you, I appreciate that,” Eads responded. “We feel very confident with the number 14. We do have growth set in for down the road to add another 10 to 11 positions. But nowhere near the hundred that you mentioned in the beginning.”

As the I-Team reported in May, Kentucky’s gambling market was about one third the size of Indiana and Ohio in 2022, when it regulated the industry with four licensing employees and two in compliance. Indiana had 152 enforcement employees while Ohio had 118. Kentucky conducted no random audits of historical horse racing machines in 2022, when the slots-like games generated 92% of the $8 billion in bets placed in the commonwealth.

“We’ve been regulating parimutuel wagering … for over 100 years,” Eads told lawmakers. “Most recently, there was over $8 billion wagered in our state. We managed that perfectly with a team of two.”

KHRC started taking license applications July 11 for the nine horse racing tracks eligible to open retail sports books by the start of the NFL season, along with “key employees” who want to work in those facilities. Kentucky’s sports betting law allows each track partner with up to three online sports books, which KHRC has committed to license by September 28.

Eads told McDaniel that KHRC has adequate funding to pay the new sports-betting employees it will hire by mid-August. It’s still looking to hire two new auditors and contract with companies that will “help with the auditing of the technical standards as well as compliance.”

“Those 14 positions will be compliant for all of wagering, so it won’t just be paid for out of the sports wagering budget,” Eads said. “We’ll also have assessments that we already take in on the race tracks. So, some of those auditors will not only be auditing sports wagering. They’ll be auditing all of our wagering products.”

Kentucky has contracted with Gaming Laboratories International to help it roll out the industry. The New Jersey-based company already handles testing and certification services for Kentucky’s HHR machines.

“GLI is considered the experts in sports wagering,” Eads said. “Of the 36 jurisdictions (that launched sports betting so far) they have helped roll it out in 25 of those, most recently in Massachusetts.”

Eads said KHRC has had multiple conversations with companies looking to launch betting apps in Kentucky, including FanDuel, DraftKings, BetMGM, Wynn and Circa.

“I have full confidence in the racing commission’s ability to promulgate these regs and oversee sports betting,” said Sen. Damon (Thayer, R-Georgetown) who joined Eads as a presenter to answer lawmakers’ questions about the developing industry. “I’d point out that in Ohio, they have professional sports teams. They have casinos. They have racinos at race tracks. A lot more locations. A lot more volume. A lot more population. We’re going to do things better than Ohio. We usually do. So, I have no doubt in this case that’s going to happen.”

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